For a country with great export potential such as Indonesia, putting in place a hub port — which enables direct shipping of goods — is crucial to support its economic development, say experts from the Port of Rotterdam in the Netherlands.

“Currently, a large portion of Indonesian exports still have to go through Singapore first before entering Europe,” Port of Rotterdam delegation member Jouke Schaap said Wednesday during a seminar.

The delegation met with government officials and businesspeople during a fourday trip here, mostly to share experiences on port management and logistical issues.

The government has for some time been planning to develop a hub port in Bojonegara, Banten, to greatly reduce the country’s dependency on Singaporean and Malaysian ports.

Bojonegara Port, with an expected cost of nearly Rp 2 trillion (around US$214 million), is expected to ease congestion at Tanjung Priok, the country’s largest current port, and ship worldwide direct.

Rotterdam is an important port of entry to Europe for Indonesian products. In 2004, total container traffic from Indonesia to Rotterdam, and vice versa, increased by 40 percent to 66,521 TEU (20-foot equivalent units).

“We are not able to determine how many Indonesian containers are transported through Singapore, but it is obviously more than 66,000,” he said.

Schaap added that with more goods coming directly from Indonesia’s own port, the cost of shipping could be lowered, thus increasing the competitiveness of local products on the European market.

The European Union is currently one of Indonesia’s largest trading partners. Non-oil and gas exports to the region amounted to $10.1 billion last year, while imports from the group reached $5.73 billion.

Aside from encouraging the country to quickly set up its own hub port, the delegates shared the latest developments in the shipping and logistics sectors, and the services Rotterdam could offer to Indonesian shippers.

Among these services is information technology to improve management, the availability of fiscal representation for exporters entering Holland and the development of short sea shipping.

In relation to the developing trend of short sea shipping, European-affiliated consultant PA Asia presented during the seminar its assessment on a planned short sea port in Cikalong, Tasikmalaya.

He added that Tasikmalaya could be a starting point as i was rich in resources, yet largely underutilized.

“A multifunctional port for fish processing, containsr feeder services and a bull terminal in Cikalong connected to short sea shipping will lead to optimal logistical solutions for the southern coast,” he said.

Last week, some 150 health and environment ministers from around the world gathered in Dubai, the United Arab Emirates, to discuss the best way of halting the deterioration of the planet’s environment. The Jakarta Post’s Tubagus Arie Rukmantara attended the event. This is a report of the three-day meeting.

Rifai, an official at the Indonesian Consulate-General in Dubai, advised The Jakarta Post not to travel to the Middle East in the middle of the year because the temperature could reach more than 50 degrees Celsius.

However, his compatriot, Bambang, noted that Indonesia, along with the rest of Asia and Africa, were also feeling the heat.

“The bottom line is the world is getting warmer,” said Bambang, who works for an oil company in Dubai.

While there is still argument about how bad global warming will be, scientists have reached a consensus that climate change will not only bring shifts in temperature, but will also affect sea levels, rainfall, humidity and winds.

In a report recently published by The Lancet medical journal, which reviewed dozens of scientific papers during the past five years, scientists found that health risks would increase as climate changes affected water sources and migration patterns.

“Sea levels have risen in recent decades, and people had already started moving from some low-lying Pacific islands. Such population movements often increased nutritional and physical problems and diseases,” the Qatar-based newspaper Gulf Times said, quoting the scientists.

About 150 health and environment ministers attending the Ninth Special Session of the United Nations Environment Program (UNEP) Governing Council in Dubai, agreed that the threat existed. They urged all governments to invest more in projects to save the future of the planet.

In its policy statement, UNEP executive director Klaus Toepfer said the world should focus on strengthening its ability to deal with the economic and environmental challenges climate change would bring.

“This special session meets at another important crossroads, where the environment meets economics. Where the urgency of balancing development with the Earth’s life support systems is being finally heard,” he said.

Toepfler stressed the need to invest in cleaner, renewable energy in order to achieve the Millennium Development Goals of 2020.

In his closing remarks, UNEP Governing Council President and Indonesian State Minister for the Environment Rachmat Witoelar said the state needed to find more creative ways to lure greater investment into clean energy.

Governments should set an example by focusing their purchasing power on buying energy-efficient goods, equipment and services, he said in his closing remarks.

This was because “the high transaction costs of initial investments in renewable sources of energy and efficiency remain an investment barrier.”

“The ministers recommended that governments should revise their energy tax and pricing frameworks to ensure that these reflect the full costs of energy production, consumption and use, and phase out environmentally harmful subsidies in favor of other energy sources,” he said.

In the Indonesian context, he told the Post that Cabinet needed to discuss how to increase budget allocations for the environment and how to provide incentives for regional administrations to create clean, green areas.

“In total, the state budget’s allocation to the environment is worth only Rp 5 trillion (US$541 million) to Rp 7 trillion and is spread throughout all the ministries. This is only 0.1 percent of the total state budget amounting to about Rp 647 trillion,” Rachmat said.

“We need to invest more in projects that are environmentally sound,” he said.

Companies won’t be required to drill wells should the seismic survey find no potential in the area, Purnomo told reporters. Under the current so-called production sharing contract with the government, companies must do seismic surveys and drill at the site regardless of the area’s potential.

“In future contracts, we won’t put drilling as part of commitment in exploration,” Purnomo said in Jakarta.

“Companies can decide themselves whether they want to continue with drilling based on the survey. It will give more flexibility to the contractors.”

Indonesia, with the second-lowest output among members of the Organization of Petroleum Exporting Countries, is seeking new reserves to replace aging fields and increase production. Investment in drilling for oil and gas fell by more than half in 2004. The country plans to invite bids for 28 oil and gas exploration areas later this month, Purnomo said.

Indonesia may also allow energy companies to explore in remote areas for the first time, using proceeds from their oil- and gas-producing units elsewhere in Indonesia, Kardaya Warnika, chairman of the state oil regulator BPMigas said today.

Indonesia has 60 hydrocarbon basins, only half of those have been explored. Most of the untapped basins are located in eastern Indonesia, where lack of infrastructure has hampered transportation and business activities.

Geologists estimate the nation’s potential resources at 77 billion barrels of oil and 332 trillion cubic feet of natural gas, according to the Ministry of Energy and Mineral Resources. The country pumped 1.061 million barrels a day of crude oil and condensate last year, missing its target of 1.075 million barrels a day, Kardaya said.

Indonesia currently gets 70 percent of the revenue from gas fileds while companies such as Unocal Corp, Exxon Mobile Corp. and Total SA get 30 percent.

The Investment Coordinating Board (BKPM) said Wednesday foreign direct investment (FDI) realization from January to December last year nearly doubled to US$8.91 billion (909 projects) from $4.6 billion (544 projects) during the same period in 2004.

In a further reflection of improving investor sentiment, FDI approvals also increased by 30 percent last year to $13.57 billion (1,648 projects), up from $10.41 billion (1,226 projects) the previous year.

The transportation, warehousing and communications sectors were most in demand, with 53 projects valued at $2.94 billion realized and 68 projects worth $3.1 billion planned.

Most of last year’s approved FDI proposals came from Singapore (203 projects valued at $3.93 billion), the United Kingdom (104 at $1.52 billion) and Japan (76 at $1.17 billion).

Indonesia’s telecommunications sector, notably the mobile communications industry, has proved highly attractive to many investors keeping an eye on its vast market of 220 million people, with the number of cell phone users expected to grow by 20 percent annually from the current level of 45 million users. The government is currently in the process of putting the latest 3G services out to tender.

The BKPM report also revealed that the level of domestic investment was in line with the upward FDI trend, with actual realization more than doubling to Rp 30.66 trillion (214 projects), compared to Rp 15.26 trillion (129 projects) in 2004. Approvals increased by 14 percent to 218 projects worth Rp 50.57 trillion from 199 projects worth Rp 44.1 trillion last year.

Local investors mostly focused on the food, paper, printing, agriculture and plantation sectors.

In total, realized foreign and domestic investment projects provided employment for 278,859 workers, compared to 206,298 workers in 2004. Meanwhile, the 467 approved projects still in the pipeline are expected to provide jobs for 407,743 workers, and exports worth $28.07 billion.

The BKPM data excludes investment in the oil, gas and mining industries, banks and non-bank financial institutions, and the capital markets as these are regulated by other agencies.

Indonesia has been struggling to lure back foreign investment — which reached a peak of $39.66 billion in 1995, but then collapsed to $13.64 billion immediately following the 1997-1998 Asian financial crisis.

The government has vowed to curb corruption and red-tape, promote legal certainty and improve the country’s infrastructure to boost the business climate and attract invest

The Indonesian economy probably expanded in the fourth quarter at its slowest pace in more than three years as higher borrowing costs curbed consumer spending.

Southeast Asia’s largest economy grew 4.2 percent from a year earlier after expanding 5.3 percent in the third quarter, according to the median forecast of 14 economists in a Bloomberg News survey. That’s the slowest since June 2002.The Central Statistics Agency (BPS) is due to release the report Wednesday.

Bank Indonesia raised its key interest rate six times from August to December to a three-year high of 12.75 percent to stem a plunge in the rupiah, prompting consumers to delay buying products, including cars and motorbikes. Some dealers for Yamaha Motor Co., the world’s second-largest motorcycle maker, this month cut down payment requirements by 60 percent to spur sales.

“People who purchase motorcycles have just enough money to pay installments,” said Gunadi Sindhuwinata, president of PT Indo-mobil Sukses International, the country’s second-largest auto retailer, which is planning to delay introducing at least one new motorcycle model. “Suddenly, when interest rates are hiked, they have to prioritize where they will put their money, for clothes, for food, education … motorcycles come last.”

Economic growth accelerated to 5.3 percent last year from 5.1 percent in 2004, according to 13 economists in the Bloomberg survey. Gross domestic product fell 2.7 percent in the fourth quarter from the previous three months, the survey said.

Domestic consumption makes up about 70 percent of gross domestic product, with some 40 million people surviving on about 40 U.S. cents a day.

Motorcycle sales dropped 3 percent in December from a year earlier, the first decline in eight years for the month. Sales of motorcycles, which reached a record in August, began slowing after the central bank started raising interest rates that month.

Meanwhile, car sales fell 41 percent in January from a year earlier, the biggest decline in almost seven years, according to the local unit of PT Astra International, the country’s biggest car retailer.

“Real discretionary spending has been cut to the bone,” said Michael Chambers, head of research at CLSA Ltd. in Jakarta. “That would gel with the sense we get in Indonesia of a very sharp drop in consumer durable purchases, motorcycles. If you go to electronics shops, you’ll see a sharp decline there as well.”

PT Chaya Motor, which sells Yamaha motorcycles in Jakarta, is requiring customers to pay Rp 600,000 (US$65) instead of their usual Rp 1.5 million down payment for the Vega-R motorcycle. The buyer then pays the balance at an interest rate of 24 percent over three years, said Rahma, a saleswoman at Chaya. Interest rates on property and vehicle loans vary from 16 to 24 percent, the central bank said.

To help counter a decline in domestic consumption, the government wants to attract about $10 billion in foreign direct investment this year, about 12 percent more than last year. President Susilo Bambang Yud-hoyono said the government would need about $430 billion in overseas investment by 2009 to help the economy expand by an average 6.6 percent.

As things stand, consumer durable companies will be pleased if they don’t grow at all this year.

“I hope we can manage zero growth,” said Indomobil’s Sindhuwinata.
Meanwhile, Choiril Maksum, director of BPS, said he was “shocked” after seeing the fourth-quarter economic data.

“We were shocked with the data for the fourth quarter compared with previous quarters,” Maksum told reporters Tuesday, without giving details.”Full year 2005 is far better than 2004 because to start the year we saw some good economic growth.”

Jakarta (ANTARA News) – The government plans to build railway tracks from industrial centres to Tanjung Priok in Jakarta to speed up cargo transportation between these centres in West Java and the port, Transportation Minister Hatta Radjasa said here on Tuesday.

“I have proposed one more project to the Committee to Expedite Infrastructure Development namely the building of railway tracks between the production centers or industrial areas and Tanjung Priok port as an alternative of expediting cargo transportation now still not smooth,” he said after meeting coordinating minister for the economy, Boediono.

Cargo transportation from the industrial areas in West Java (Bekasi, Cikarang, Karawang and others) has so far been carried out through the crowded Jakarta-Cikampek toll road, so that it has not been smooth.

“Although more toll roads will be built, it would be better if more railway tracks would also be built,” he said, adding that private businesses would be involved in the project.

He said the project would cover a section from Pasoso to Tanjung Priok, a road from Bekasi to various indusrial areas in Cikarang and Karawang and a dry port as well as an access from the industrial areas to the railway line.

“I hope in 2007 Pasoso is already connected with Tanjung Priok including the JICT and Koja,” he said.

He said he predicted it would cost around Rp35 billion to connect Pasoso and Tanjung Priok. (*)

A group of Singapore-based U.S. businesspeople have expressed confidence about the future outlook for Indonesia’s economy due to its expanding market and the government’s continuing economic reform measures.

The businesspeople, representing some 20 U.S. companies based in Singapore, met with local counterparts and economics ministers in Indonesia during their visit here to get first-hand information about business opportunities and the direction of economic reform in Indonesia.

“Indonesia is a very important country in the region, and it is an area with a lot of opportunities and interest for our members,” said Amy M. Adams, chairman of the American Chamber of Commerce in Singapore.

Such qualities, however, would not attract investment unless the government addressed various concerns raised by business, especially those concerning taxation, labor and customs — three problematic areas that had made investing in Indonesia less attractive.

Adams noted that the government leaders they met during their visit appeared to be serious about reforming the taxation, labor and customs sectors.

“Things won’t happen overnight, but as long as they have an ongoing commitment to reform, and progress is continuing to be made, that speaks very well for an enhanced investment climate here in Indonesia,” she said.

On top of these reforms, the government also needed to take care of security issues, which often frightened off foreign businesses and tourists.

U.S. Ambassador to Singapore Patricia L. Herbold, who accompanied the visiting delegates, said the fact that Indonesia had the largest Muslim population in the .world would not deter investors if the government could maintain order and security.